Step 3. Building projects and talent

Building new baseload power plants requires sophisticated coordination of planning, labor and materials. We have a long tradition of hands-on involvement in large-scale construction projects. In fact, our existing generation fleet was almost entirely engineered and built and is now operated by our own workforce.

Before the merger of Cinergy and Duke Energy in April 2006, both companies were in the process of completing large environmental retrofits — installing scrubbers and SCR (selective catalytic reduction) systems on some of their largest coal-fired units. Experience gained on those projects by our project management teams and through partnerships with design, engineering and construction firms is being transferred to the new power plant projects.

For example, in the Carolinas, project and construction management team leaders from the Marshall Steam Station scrubber project are moving to work on the new Cliffside unit and the scrubber installation on an existing unit of that plant. Project and construction management team leaders working on the scrubber at Belews Creek Steam Station will transition to the new gas-fired units being planned on the sites of the Buck and Dan River steam stations. These project management teams will also work on the new Lee Nuclear Station in South Carolina. In the Midwest, Duke’s project management teams completing environmental retrofits at the Gibson and Gallagher coal-fired plants in Indiana are transitioning to the new Edwardsport IGCC plant.

Global demand for engineering, equipment, materials and labor has increased. But with our existing relationships with contractors and suppliers and our use of fixed-price purchase orders, we have already locked in much of the costs for the new coal and gas plants.

We also completed a workforce planning effort to better understand the effects of an aging workforce on our future plans. We found that, due to expected retirements and attrition, we will need to replace almost a third of our workforce over the next five years. Many of our contractors face similar challenges.

Our response strategies include supporting state and local workforce development efforts, providing an employment proposition attractive to a diverse population, broadening existing and initiating new programs to ensure access to top talent, and significantly expanding our employee development, engagement and retention programs.

We have already taken a number of actions, including expanding our staffing functions, ramping up our co-op and summer student hiring programs, developing knowledge transfer strategies, increasing the frequency of internal talent reviews from annually to quarterly, and enhancing our professional development and supervisory/management training programs.

We have also become more active in industry, state and local efforts to develop the workforce of the future. For example, we are supporting K-12 science, technology and math education, and we have partnered with community colleges and technical schools to train technicians to work for us or our contractors. We also advise universities on how to keep curriculum current.